Exhibit 10.32


 


Amended and Restated Change of Control
Retention and Severance Agreement


 


This Amended and Restated Change of Control Retention
and Severance Agreement (the “Agreement”) is made and entered into as of May 18, 2004
(the “Effective Date”),
by and between Cepheid and Joseph Smith (the “Executive”) and amends and restates in
its entirety any Change of Control Retention and Severance Agreement by and
between Cepheid and Executive existing prior to the date hereof.  Capitalized terms used in this Agreement
shall have the meanings set forth in Section 3 below.


 


1.             Purpose. 
The purpose of this Agreement is to encourage Executive to remain in the
employ of the Company and to continue to devote Executive’s full attention to
the success of the Company in the event of a Change of Control, as such term is
defined in Section 3 of this Agreement.


 


2.             Termination Upon Change of
Control.  In the event of Executive’s
Termination Upon a Change of Control, Executive shall receive the following
payments and benefits:


 


2.1         Accrued Salary and Vacation, and
Benefits.  Executive shall receive
all salary and accrued vacation (less applicable withholding) earned through
Executive’s termination date, and the benefits, if any, under Company benefit
plans to which Executive may be entitled pursuant to the terms of such plans.


 


2.2         Stock Award Acceleration.                Provided that Executive complies
with Section 5 below, all outstanding stock options granted and restricted
stock issued by the Company to Executive prior to the Change of Control shall
become fully vested and exercisable immediately prior to the effective date of
the Termination Upon a Change of Control.


 


2.3         Cash Severance Payment.  Provided that Executive complies with Section
5 below, Executive shall receive a lump sum cash payment in an amount equal to
fifteen (15) months of Executive’s the effective base salary (less applicable
withholding), paid within ten (10) business days of the effective date of the
Termination Upon a Change of Control.


 


3.             Definitions.  Capitalized terms used in this
Agreement shall have the meanings set forth in this Section 3.


 


3.1         “Cause” means Executive’s (a)
failure to perform any reasonable and lawful duty of Executive’s position or
failure to follow the lawful written directions of the Chief Executive Officer;
(b) commission of an act that constitutes misconduct and is injurious to the
Company or any subsidiary; (c) conviction of, or pleading “guilty” or “no
contest” to, a felony under the laws of the United States or any state thereof;
(d) committing an act of fraud against, or the misappropriation of property
belonging to, the Company or any subsidiary; (e) commission of an act of
dishonesty in connection with Executive’s responsibilities as an employee and
affecting the business or affairs of the Company; (f) breach of any
confidentiality, proprietary information


 
















 


or other agreement
between Executive and the Company or any subsidiary; or (g) failure or refusal
to carry out the reasonable directives of the Company.


 


3.2         “Change of Control” means (a)
any “person” (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)), other than a trustee or
other fiduciary holding securities of the Company under an employee benefit
plan of the Company, becomes the “beneficial owner” (as defined in Rule 13d-3
promulgated under the Exchange Act), directly or indirectly, of securities of
the Company representing 50% or more of (A) the outstanding shares of
common stock of the Company or (B) the combined voting power of the Company’s
then outstanding securities; (b) the Company is party to a merger or
consolidation which results in the voting securities of the Company outstanding
immediately prior thereto failing to continue to represent (either by remaining
outstanding or by being converted into voting securities of the surviving or
another entity) at least fifty (50%) percent of the combined voting power of
the voting securities of the Company or such surviving or other entity
outstanding immediately after such merger or consolidation; (c) the sale or
disposition of all or substantially all of the Company’s assets (or
consummation of any transaction having similar effect); or (d) the dissolution
or liquidation of the Company.


 


3.3           “Company” means Cepheid and
any successor or assign to substantially all the business and/or assets of
Cepheid.


 


3.4           “Diminution of Responsibilities”
means the occurrence of any of the following conditions, without Executive’s
consent: (a) a significant diminution in the nature or scope of Executive’s
authority, title, function or duties from Executive’s authority, title,
function or duties in effect immediately preceding any Change of Control; (b) a
ten percent (10%) reduction in Executive’s base salary or a twenty-five percent
(25%) reduction in Executive’s target bonus opportunity, if any, in effect
immediately preceding any Change of Control (in either case, unless such
reduction is part of a Company officer-wide program to reduce expenses); (c)
the Company’s requiring Executive to be based at any office or location more
than 50 miles from the office where Executive was employed immediately
preceding the Change of Control; (d) any material breach of the terms of  this Agreement by the Company; or (e) failure
of any successor or assignee to the Company to assume this Agreement.


 


3.5           “Termination
Upon Change of Control” means:


 


(a)           any involuntary termination of the
employment of Executive by the Company without Cause within twelve (12) months
following a Change of Control; or


 


(b)           any resignation by Executive based on
a Diminution of Responsibilities where (i) such Diminution of Responsibilities
occurs within twelve (12) months following the Change of Control, and (ii) such
resignation occurs within ninety (90) days following such Diminution of
Responsibilities.


 


4.             Federal Excise Tax.  If the payments and benefits provided for in
this Agreement constitute “parachute payments” within the meaning of the
Internal Revenue Code of 1986, as amended (the “Code”), but for this Section 4, would be
subject to the excise tax imposed by Section 4999 of the Code, then the
payments and benefits under this Agreement will be payable,


 
















 


at Executive’s election,
either in full or in such lesser amount as would result, after taking into account
the applicable federal, state and local income taxes and excise tax imposed by
Section 4999 of the Code, in Executive’s receipt on an after-tax basis of the
greatest amount of benefits.


 


5.             Release of Claims.  The Company may condition the payments and
benefits set forth in Sections 2.2 and 2.3 of this Agreement upon the delivery
by Executive of a signed release of claims in a form satisfactory to the
Company.


 


6.             Agreement Not to Solicit.  If Company performs its obligations to
deliver the severance compensation set forth in Sections 2.2 and 2.3 of this
Agreement, then for a period of one (1) year after Executive’s termination of
employment, Executive will not solicit any employee of the Company to
discontinue that person’s employment relationship with the Company.


 


7.             Arbitration.  Any claim, dispute or controversy arising out
of this Agreement, the interpretation, validity or enforceability of this
Agreement or the alleged breach thereof shall be submitted by the parties to
binding arbitration by the American Arbitration Association.  The site of the arbitration proceeding shall
be in Santa Clara County, California, or another location mutually agreed to by
the parties.


 


8.             Conflict
in Benefits; Effect of Agreement.  This Agreement shall supersede all prior
arrangements, whether written or oral, and understandings regarding severance
compensation following a Change of Control and shall be the exclusive agreement
for the determination of any severance compensation due upon Executive’s
termination of employment upon a Change of Control.


 


9.                                       Miscellaneous.


 


9.1           Successors of the Company.  The Company will require any successor or
assign (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, expressly, absolutely and unconditionally to assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession or assignment had
taken place.


 


9.2           No
Employment Agreement.  This Agreement
does not alter Executive’s at-will employment status or obligate the Company to
continue to employ Executive for any specific period of time, or in any
specific role or geographic location.


 


9.3           Modification of Agreement.               This Agreement may be modified,
amended or superceded only by a written agreement signed by Executive and the
Chief Executive Officer.


 


9.4           Governing Law.  This Agreement shall be interpreted in
accordance with and governed by the laws of the State of California.


 


9.5           Entire Agreement.  This Agreement constitutes the entire
agreement and understanding of the parties with respect to the subject matter
of this Agreement, and supersedes all prior understandings and agreements,
whether oral or written between or among the parties hereto with respect to the
specific subject matter hereof.


 
















 


	
  EXECUTIVE

  	
  CEPHEID

  
	
   

  	
   

  
	
  

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Joseph Smith

  	
  Name:

  	
  John
  Bishop

  	
   

  
	
   

  	
   

  	
   

  
	
  

  	
  Title:

  	
  Chief
  Executive Officer

  	
   

  
						



 


 


[Signature Page to Amended and Restated Change of Control Retention and
Severance Agreement]